This sheds some light on exports and what we might expect going forward. An excellent chart showing trend of US GOM exports to various global regions did not transfer, so go to the original story at link below to see it.
https://www.spglobal.com/platts/en/mark ... nd-worries
07 Aug 2019 | 19:59 UTC
Houston
Analysis: US crude exports tumble on tighter arbs, demand worries
Author Kristian Tialios
Editor Jeff Mower
Commodity Oil, Shipping
Highlights
Fewer barrels heading to Asia
WTI MEH arbitrage tightens
New pipelines to bring more crude to USGC
Houston — US crude oil exports fell to the lowest level since October 2018 last week, as arbitrage economics have tightened, and on heightened concerns of a slowdown in demand.
The slowdown comes amid an expected ramp up in exports driven by rising supply and pipeline capacity linking Permian crude production to the US Gulf.
US crude exports averaged 1.865 million b/d in the week ending August 2, down over 700,000 b/d week on week, and nearly 1 million b/d lower than the year-to-date average, according to data from the Energy Information Administration.
After averaging around 3.3 million b/d in June, US exports have begun to taper off over the past few weeks, with the 4 week moving average of US exports falling 400,000 b/d from just two weeks prior.
The Brent/WTI swaps spread, an indicator for the competitiveness of US crude internationally has narrowed lately, with the 30-day rolling average at $6.21/b, nearly $1.80/b tighter than the average of the prior 30 trading days at $7.96/b, according to data from S&P Global Platts.
Platts Analytics data shows the WTI MEH arbitrage into Rotterdam open versus Forties crude at a $1.42/b incentive, although the incentive has fallen nearly $2/b since June. Similarly, the WTI MEH arbitrage into Singapore versus Tapis crude remains open at a $1.79/b a incentive, although this is down nearly $1/b from the end of July.
While crude exports have been stable to Europe in recent weeks, exports to Asia have fallen since mid-July, Platts cFlow trade-flow software shows. The US exported 5.17 million barrels of crude to Asia last week, down from 9.7 million barrels the week ending July 19.
China, India, South Korea and Singapore have been taking fewer barrels over the past two weeks, cFlow data shows.
"[It's the] tight arb and also demand, I think," one broker said. "Demand growth is being underestimated in my opinion."
Global demand concerns have been bearish for the oil complex of late, driven by the ongoing trade battle between the US and China.
Recent economic data has painted a more bearish picture for growth in Asia. For instance, second quarter industrial production contracted in Japan, South Korea, Singapore and Thailand, year-on-year.
SOME SEE INCREASE AHEAD
While US exports have trended lower, some traders still expect a flood of US crude reaching the international market in August and September.
"The US is going to be exporting somewhere between 800,000 and 1 million b/d more in September than they were managing in July," one trader said.
Weekly data from the EIA shows July US exports averaging around 2.86 million b/d.
"[It's] hard to tell week by week but for the month of August, the arbs are tough to make work," one WTI crude trader said Wednesday. "[You] have to be very patient and new crude from Corpus [Christi] is starting to add to the supply."
New pipeline connections from the Permian Basin are expected to become operational during 2H 2019 and Q1 2020, bringing more crude directly from the Permian to the USGC.
The 670,000 b/d Cactus II pipeline will start service next week to Ingleside, Texas, with service to Corpus Christi starting in the first quarter of 2020, Plains All American said Tuesday. The 400,000 EPIC crude pipeline and 900,000 b/d Gray Oak pipeline are expected to start up by the end of 2019.
Given the added pipelines, the Permian will have sufficient takeaway capacity through 2020, according to S&P Global Platts Analytics.
As more crude reaches the US Gulf Coast, and refinery inputs remain stable, the additional barrels will need to either find homes in the international market, or be placed in storage.
USGC crude stocks climbed 5.5 million barrels last week to 222.7 million barrels, putting stocks at roughly 61% of USGC working storage capacity, EIA data shows.
-- Kristian Tialios, Kristian.Tialios@spglobal.com
-- Edited by Jeff Mower, newsdesk@spglobal.com
S&P Global: US crude exports tumble on tighter arbs, demand
Re: S&P Global: US crude exports tumble on tighter arbs, dem
A useful site that tracks US Weekly Crude Oil exports: https://www.eia.gov/dnav/pet/hist/LeafH ... REXUS2&f=W
Scroll down to bottom to see weekly figures for 2019 to date. Or use the interactive graph at the top.
Scroll down to bottom to see weekly figures for 2019 to date. Or use the interactive graph at the top.